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Council members: Rising rents could prompt controls

Council members: Rising rents could prompt controls

Michele Ellson

Thursday, February 21, 2013 - 00:05

City leaders said Tuesday they could consider imposing rent controls in Alameda after an emotional hearing about rent increases that drove an elderly couple and their disabled daughter from their home of 17 years.

“I’m not advocating for rent control this point – I’ve been on the City Council for two months. But if we keep hearing about cases like this, I’ll certainly consider it,” Vice Mayor Marilyn Ezzy Ashcraft said.

Councilman Tony Daysog said he thinks the case should prompt a discussion about controls the city could consider, noting controls in place in Hayward and San Leandro. San Leandro has a rent review board similar to Alameda’s with slightly broader enforcement powers, while Hayward has rent stabilization rules that limit increases.

“This is a shot over the bow,” Daysog said. “A person coming into Alameda, coming in to jack up the rent because we don’t have rent control. This is an opportunity to start the discussion.”

Jose and Aura Lyla Gonzalez recently left their apartment on Benton Street after their rent was raised 67 percent, from $900 a month to $1,500 a month. The couple’s daughters and others who rent at the four-unit building complained to the city’s Rent Review Advisory Committee, but the building’s new owner refused to appear at a pair of meetings the committee held to try to mediate the dispute.

One member of the committee, which voted to recommend the increases be lowered to 10 percent, said the rent increase imposed on the Gonzalezes was the biggest they’d seen.

A city staffer told The Alamedan that the committee process works best when both landlords and tenants participate and that they typically do. But the process is voluntary, and landlords aren’t required to implement the committee’s recommendations. If a landlord refuses to participate, the case could be forwarded to the City Council, as this case was. But the council – which voted unanimously Tuesday to send the property owner a letter regarding the increases – also lacks the power to enforce the recommendations.

In a pair of letters to the committee, Claudia Bowman of House Source LLC, the property’s new owner, cast the rent hikes as a business decision intended to cover the costs of purchasing the property. Bowman, who did not respond to interview requests and did not speak at Tuesday’s council meeting, noted in one letter that the committee process is voluntary and declined to participate and said in the other the company had checked with the city and a lawyer to make sure the city didn’t have rent control before buying the building.

“We wanted to be certain that we would be able to pass the expenses of a $650,000 purchase price, new taxes, and insurance as well as city requirements on to the tenants, in order for us to consider this investment,” a January 11 letter faxed from Bowman to the committee says.

Michael Shepherd, an attorney representing House Source LLC, told the council the home’s new owner is still charging below-market rents and that the money is needed to cover the $652,000 purchase price of the property and to improve what tenants and one neighbor said is a run-down property with a host of needed fixes.

“This landlord is not evicting these tenants from this property. They can stay, but they have to pay,” Shepherd said.

Through tears, the Gonzalezes’ daughter, Amparo Adlao, said her parents were responsible tenants who took care of their home as best they could, who now live in fear that they have no protection from another big rent increase.

“We’ve lived in Alameda a very long time,” Adlao said. “If it happened to my parents, it could happen to me. It could happen to anyone.”

Other tenants who still live at the Benton Street property asked the council whether they would allow rent increases like the ones they experienced – which they equated to an eviction notice - to continue.

“It’s just an awful feeling, to feel like you’re being driven out of your home. Market driven or not, who at this time can afford a 55 percent rent increase?” tenant Geoff Thorpe said. “These new owners are not willing to have a face-to-face conversation, they’re not willing to listen to any sort of reason. It’s just dollars and cents.”

Affordable housing advocates said cases like this one are proof the city needs more affordable housing, particularly for seniors and disabled people. They praised the council for allowing multifamily housing in Alameda for the first time in nearly 40 years and said it now must be built.

“Measure A has stopped the building of multifamily housing in this city for 30 years. That’s why landlords can take advantage of people and they can continue to do it,” Renewed Hope’s Laura Thomas said. “Now that the housing market has returned, we should see developers come to build multifamily housing.”

But some said they didn’t want the city to begin beating up on landlords and investors who are risking their money to buy housing here. Karen Bey questioned why the home’s prior owner didn’t raise the rents incrementally each year to cover improvements, something she said the City of Oakland – which has rent control – allows.

“The building has a lot of deferred maintenance. Somebody has to pay for that,” Bey said. “This is a conversation that we need to have. But I think it should be fair and balanced. There are two sides of the story.”

And while some speakers called for rent control to be put in place, Alameda Association of Realtors president Sally Han said that while rent issues are important, the association would like to see the city’s existing system remain as-is.

Council members said they think landlords like House Source give others a black eye. And some blasted the Realtors association for its position.

“Behaviors like this is what really put a bad reputation over landlords,” said Councilman Stewart Chen, who said he has been a landlord for the past decade.

Mayor Marie Gilmore, who will be signing a letter to send to House Source LLC regarding the rent increases, said the new landlord’s refusal to talk to tenants about the rent increases was as bad as the increases themselves.

“The fact that the landlord didn’t condescend to meet with her tenants showed a very high-handed and abusive attitude,” Gilmore said. “I don’t want to beat up on landlords, I know there are a lot of good landlords in town. But this landlord is not one of them.”

Gilmore told the Realtors association that she was glad they attended Tuesday’s meeting, but that she is also considering what speakers said about collecting data on rent control.

“If you don’t ultimately want us to get to the point where we’re looking at that and moving forward, then I think it’s incumbent on you guys to police your own,” she said.

Comments

Submitted by AlexFromBerkeley on Thu, Feb 21, 2013

Wow thats really upsetting. But i have to say that i feel the same pain because this is actually happening to everybody. ESPECIALLY in Downtown Berkeley. If my rent was 1600$ Wow id be in heaven! Thats so incredibly cheap! Try 2692$/mo! Thats how much its going to cost me next time i renew my lease because housing prices in downtown Berkeley are disgustingly inflated. In 2010 i was paying 2126$ a month! Right now its 2276$ for a two bedroom one bath in a tiny apartment building. Yes Berkeley has rent control and it is such an amazingly worthless program that is laughable! Rent control cant do anything to help anybody in Berkeley unless their housing was build before 1980 and they have been living there since then. if those conditions arent met the place you are renting can raise you rent by 1000000% if they wanted and get away with it! And in Berkeley they probably would get away with it because the cal students are so desperate and rich. If alameda gets rent control it probably still wont help in the slightest. It will just create a gray market where people have the same rent for years then nobody will come build housing in Alameda because it wont be profitable and things will deteriorate. Ideally alameda needs to get more newer housing that is earthquake safetied because one the big one hits that big sand pile we know as alameda will be destroyed and everyone else wont fair much better even with their earthquake safetied buildings. The housing market might be improving but that doesn't seem to be doing anybody who lives here in the bay area any good just forcing us out of our homes. Because everybody got their houses foreclosed on everyone wants to rent because its cheaper so now theres simply not enough housing in the bay area so supply and demand economics go into effect.

Submitted by nowwhat on Thu, Feb 21, 2013

Am I to understand that the house was purchased with the intent of passing not just the space but the cost of improvements on to the tenants? Is that legal? Is this LLC going to perform the improvements while the tenants are living there? I am clueless on rental laws but if there are improvements to be made, doesnt that come out of the pocket of the landlord?

People are being ejected from their homes by banks, lets not add renters to that tragedy. Please establish rent controls that keep this situation from spiraling FURTHER out of control.

~a homeowner who cares about her fellow Alamedans

Submitted by Bowman on Thu, Feb 21, 2013

A few added bits of information:
1. We were advised by Harbor Bay Management when we first purchased the building that the Gonzalez’s were looking for another apartment and would be moving as soon as they found one (Harbor Bay was helping them in their search) as they could no longer negotiate the stairs (it is a flat on the second floor). This can be verified by Ellen Purdy at Harbor Bay.
2. The new owners have spent $4254 on work requested by the tenants in the past 4 months.
3. The Gonzalez’s flat is a 3 bedroom 2 bath and about 1500 sq ft.
4. We have just received a bid for electrical repairs to the Gonzalez’s unit in the amount of $3890. The previous owner chose not to do electrical repairs but we will do the repairs.

Submitted by Karen Bey on Thu, Feb 21, 2013

The prior owner obviously had an unspoken agreement with the tenants – to keep their rent low, in exchange for the tenants accepting the apartment as is. And after 17 years the tenants came to believe they had an ownership interest or a “life’s estate interest” in the property because of the repairs they made. This was untrue; they simply had an agreement to accept the apartment as is in return for low rents.

The real crime was that the previous owner was a slum lord who took rents from these tenants for 17 years --- and put little to no money back into the building. Had he raised rents at least 3% per year, something Oakland allows, the rents would be closer to market today and he could have used those funds towards the much needed repairs. A 3% increase would have amounted to around $24 - $30 dollars per month.

The real issue here is the lack of affordable housing, and who is best suited to subsidize the cost of affordable housing? If the mortgage, taxes, insurance, repairs and maintenance costs are X, and the rents are less than X who pays? Asking small time landlords to pay is one way, but not every landlord can afford it; they are not evil or greedy, they simply can’t afford it.

Developers of large size apartment buildings are better suited for this, because they are rewarded with a density bonus. In exchange for higher density, they can provide affordable housing to lower and moderate income families and are able to spread the subsidy cost over a larger number of units.

I hope we can turn our focus to building more affordable housing in Alameda, which I believe is the answer to this age old problem.

Submitted by Jake on Thu, Feb 21, 2013

This is a classic example of why I would never acquire a property with existing long term tenants at below market rental levels. The property usually will haven. a need for mega repairs which will warrant substantial rental increases and the tenants will be at a disadvantage. The solution would have been to give everyone a 30 day notice to vacate, especially if the property is unsafe and give the tenants the option to rent back at the higher rate if they wish. What I don't like is our mayor and city council of yes people are talking (rent control), as if that is going to solve anything. It will, in fact, drive rental levels up to market plus levels by landlords with empty dwellings who will hedge themselves once they get a tenant back in. If the mayor and Mr. Daysog believe so strongly in this issue, let them pay the rental increase difference out their own personal pockets. There is no way a landlord can put money into a property if they cannot get money out of it. Anything short of that usually means the landlord is subsidizing the rents and losing money on the investment and keeping usually substandard living conditions for their tenants. Its a difficult situation when existing tenants are present. The landlord is the bad person if they raise rent and the bad person if they can't fix the property.

Submitted by Ed Hirshberg on Thu, Feb 21, 2013

Before going down this road, we should take inventory of what we have and take a step outside of our cocoon. New York has had emergency rent control since WWII. There is a perennial shortage of housing, while the well to do and even congressmen (Charles Rangel) soak up the supply of rent controlled apartments. Those not so fortunate live in the "projects". We are very fortunate to live in a corner of the world where you can take a month's salary and put it down on a rental apartment and have a home. In much of the world this is not possible. In some countries you must be politically conected, or belong to the right ethnic group. Demands that are illegal in this country. We will lose a lot of freedom if we cannot go out and rent an apartment when we need to. A rise in prices will spur an increase in investment, which will ultimatedly bring prices down. Don't throw the baby out with the bathwater.

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